KUALA LUMPUR (Dec 20): Shares of YTL Corporation Bhd (KL:YTL) and its associate YTL Power International Bhd (KL:YTLPOWR) resumed their rallies to hit multi-month highs after the Malaysian Anti-Corruption Commission (MACC) cleared YTL Power's subsidiary of any wrongdoing in the 1BestariNet project investigations.
At the time of writing, YTL Power gained 14 sen or over 3% to RM4.22, a nearly four-month high, valuing the group at RM35.4 billion.
YTL Corp's shares gained 10 sen or 4% to a nearly three-month high of RM2.65, valuing it at RM29.4 billion. The stock rose over 9% in morning trades.
TA Securities said MACC's decision, along with the favourable outcome of the UK's Water Services Regulation Authority’s (Ofwat) PR24 final decision, removes key overhangs for the utility firm.
YTL Power’s subsidiary Wessex Water stands to benefit from Ofwat’s PR24 final determination for the 2025-2030 regulatory period, said TA Securities in a note on Friday.
Key outcomes include a 21% increase in average household bills against PR19 levels, compared to a prior draft decision that suggested a 12% reduction.
Total expenditure was revised upward by 14% from the draft determination, representing a 68% increase from PR19.
Allowable return was raised to 4.03%, significantly higher than the PR19 rate of 2.92%.
These adjustments are projected to drive a 35.9% growth in Wessex Water’s regulatory capital value over the five-year period, sustaining long-term returns.
The improved outcome is expected to bolster the subsidiary’s earnings, which had already rebounded following a 12% tariff hike in April 2024, the research house added.
“The next milestone for YTL Power, in our opinion, is the commissioning of its data centres by mid-CY2025 (mid calendar year 2025),” TA Securities noted.
Ongoing developments, including a 100MW AI data centre and a 40MW co-location facility, are scheduled for completion by the second and third quarters of CY2025 respectively.
“We raise FY2026F/2027F net profit by 1.3%/2.7%,” the research house said following Ofwat’s final decision.
"The improved regulatory outcome coupled with its expanding data operations positions the group for sustained growth,” it added.
The stock’s valuation at 11.3 times FY2025 forecast price-to-earnings ratio (PER) remains attractive, said TA Securities, which reaffirmed its “buy” call on YTL Power and raised its target price to RM6.53 from RM6.39.